Total economic life for a class of buildings is best supported by:
Correct Answer
B) Market evidence and published life expectancy data for that type
Why this is correct: Total economic life is a market-driven estimate of how long a building type remains competitively useful. As the original explanation states, it is best supported by objective market evidence, such as paired sales analysis, extraction from market data, and published life expectancy tables for that building class. Why the other choices are wrong: 'The manufacturer's warranty period for the roof system' relates to a component's physical life, not the building's overall economic life. 'The appraiser's estimate of the structure's physical durability' addresses physical life, which is typically longer than economic life. 'The remaining term of the property's mortgage financing' is a financial, not a market, factor. Exam tip: Economic life is about market utility; always seek external market data, not internal physical estimates.
Why This Is the Correct Answer
Why this is correct: Total economic life is a market-driven estimate of how long a building type remains competitively useful. As the original explanation states, it is best supported by objective market evidence, such as paired sales analysis, extraction from market data, and published life expectancy tables for that building class. Why the other choices are wrong: 'The manufacturer's warranty period for the roof system' relates to a component's physical life, not the building's overall economic life. 'The appraiser's estimate of the structure's physical durability' addresses physical life, which is typically longer than economic life. 'The remaining term of the property's mortgage financing' is a financial, not a market, factor. Exam tip: Economic life is about market utility; always seek external market data, not internal physical estimates.
More Cost Approach Questions
In a cost approach for a proposed building, the appropriate cost basis is generally:
A warehouse cost $210,000 to build when the cost index stood at 105. The index is now 210. Its indicated current cost is:
The age-life method expresses depreciation as:
Market extraction of depreciation is limited by the fact that it:
Functional obsolescence caused by a deficiency is measured as curable when:
Curable physical deterioration is measured at cost to cure because:
A 2,050 sq ft dwelling is priced at $178 per square foot with a $34,000 detached garage and $21,500 of site improvements. Cost new is:
A house has three bedrooms sharing one bathroom, and adding a second bath is economically justified. This is:
Direct costs in a construction budget include:
An appraiser writes that a 40-year-old house has an effective age of 10 but describes original wiring, original kitchen and a 25-year-old roof. The report's problem is:
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Income Approach
8.2% of exam